Illiberal development

A few years ago, Vietnam was the rage among the Bangladeshi chatteratis who hobnobbed in the development circle. Look how they have forged ahead under a strong, patriotic leadership, while we languish behind because of our corrupt, venal political class — that was the refrain. Of course, anyone who knew anything reasonably detailed about both countries would have their eyebrows raised by that. I have vague recollection of writing something for Zafar Sobhan on this, but can’t find any link anywhere.

Vietnam, for example, is controlled entirely by the ruling party. The economy is one of the most volatile in Asia. What once was thought of being a promising economy has recently been in distress. Vietnam’s macro economy was relatively stable in the 1997-2006 period, with low inflation, a 7 to 9 percent total output expansion annually and a moderate level of trade deficit. But Vietnam could not weather the adverse impact from the 1997-98 Asian financial turmoil, which partly curbed the FDI flow into its economy. Starting in late 2006, both public and private sector firms began to experience structural problems, rising inefficiency, and waste of resources. The daunting problem of inflation recurred, peaking at an annualized 23 percent level for that year.

On the supply side, cross-country competitiveness assessments show that Vietnam is falling behind relative to comparator economies. The proliferation of so-called “zombie” workers at Vietnam’s state-owned enterprises (SOEs) is only one of many manifestations of the economy’s underperformance. Economic growth last year was 5.03 percent. SOEs account for 40 percent of GDP. Many of them are hurting because they took advantage of easy credit to make foolish investments. Over the years, powerful interest groups within the ruling Communist Party have largely resisted calls to reform the SOEs. Senior party officials allegedly regard them as their personal cash cows.

The author, Zahid Hussain, is from Bangladesh. The piece is titled: Can political stability hurt economic growth?. Mr Hussain’s answer: Not all forms of political stability are equally development friendly; much depends on the extent to which stability translates into good governance.

Specifically:

….political stability can be achieved through oppression or through having a political party in place that does not have to compete to be re-elected. In these cases, political stability is a double edged sword. While the peaceful environment that political stability may offer is a desideratum, it could easily become a breeding ground for cronyism with impunity.

The piece was published on 6 January 2014. It might as well have carried a disclaimer about any inference about any South Asian country with a fraudulent election the previous day!

In the months since that election and this piece, a new meme has taken hold among the Vietphiles of Dhaka chatterati — you know, NGO and social business big wigs, media consultants, development practitioners, social scientists and such like:

Let’s get real, yes this government isn’t exactly democratic, but so what, they are giving us stability, which translates into 6-7% growth, and tangible social development, you know, Bangladesh paradox and all that, would you really want to risk that for the rotten instability that our so-called democracy produced?

If you haven’t come across this line of argument, then you’re probably not mixing with the right crowd. Mr Hussain puts this thinking into perspective. Edward Hadas, an banker-turned-journalist, provides a slightly different take:

As long as the authoritarian government is reasonably well intentioned and competent, its ability to act can make a big economic difference. Much of China’s widening economic lead over India can be traced back to the differences in political style. Corruption is rampant in both countries, education is about equally prized and local authorities have roughly the same amount of autonomy. However, the central Chinese government clears far more paths for investment far more quickly.

Neo-authoritarianism also comes with some big economic disadvantages. Without strong non-government organisations, there is no one to restrain graft and corruption, so people in and close to the government can unjustly amass great fortunes and break laws with impunity. Also, while today’s strong leaders are far less megalomaniacal than Hitler or Stalin, they are still prone to overconfidence and grandiose ambitions. As they work in a sycophantic political environment, there is rarely anyone one willing to object forcefully to foolish plans.

Speaking of India and China, my friend Shafiqur Rahman’s masterly piece (that I do have a few quibbles with — another time) concludes:

Collective leadership as a mechanism of power-sharing through checks and balances among competing political camps, but also incorporating more dynamic and pluralistic decision-making process seem to be more suited for the age we live in.

How many of these things exist in today’s Bangladesh?

Politics-as-we-knew-it is gone, and the current order may appear stable, but may actually be quite fragile. Chattering classes peddling the illiberal development paradigm, I’m afraid, may end up with just plain old illiberalism, and no development.

3 Responses

Well, strictly speaking, they are right. Democracy is no guarantee of good governance, nor dictatorship [under many guises] a guarantee of economic ruin. The start period of South Korea’s rapid rise was initiated under a military dictator. Ditto for us [well, “dictator” is harsh here, but you sort of get my point]. Singapore’s authoritarian little Hakka-Chinaman did wonders for the rapid economic expansion of his midget island-state. Plenty of India’s democratic leaders have sucked big fat monkey balls when it came to economic matters, and nor are they distinguished as a category in this regard.

I personally think you are wondering off the royal road. I get what you guys are trying to say. In the long run, Bangladesh should have a stable multi-party democracy that has sufficient checks and balances on governmental power, while fostering and supporting strong underlying institutions and rule of law. No argument there. But the references to Vietnam vs Bangladesh in this regard is basically using your crocodile mouth to write checks that your hummingbird a◉◉es can’t cash. We only have to look at basic modes of governance like infrastructure and red tape to recognize that their administration is an order of magnitude more efficient than anything we have. Their growth rates and ports reflect this.

The complaint you can level at the Hasina government in response is that they are both corrupt & incompetent nitwits who would have difficulties in organizing a bachelor party in a Stringfellows™ lap-dancing nightclub, let alone running a country. Of course you have to try and push a valid alternative in government, and let’s face it, you guys don’t have one. So us neutrals have to sit here and watch your temper tantrums being thrown at each other while Dhaka burns, and we long for a Prime Minister who actually looks as though they could defeat Dan Quayle in a chess match.

Skill, competence and merit sir, the things us regular Bangladeshis long for in a government. Then we will watch your chattering political classes toss their lungis at each other all day long, I promise. We’ll even give you guys a TV show. You know, that the rest of us watch in amusement and not horror.

“Skill, competence and merit sir, the things us regular Bangladeshis long for in a government.”

No, they don’t. You can pick any 300 individuals with as much skill/competence/merit as you like, provided that they have never been involved in politics and don’t come from a political family. I’ll pick 300 of the worst MPs from the past 10 years. My 300 will beat your 300 by a margin of something like 280 – 20.